China has launched a trade investigation into imports of solar-grade polysilicon – an ingredient in solar panels – from the EU, escalating the trade disputes between China and the west over renewable energy.

The global polysilicon market – worth $7.4bn last year, according to IHS iSuppli – is the latest to be hit by the trade frictions in the solar panel sector. Trade cases have multiplied in the solar industry as panel makers around the world, including in China, face falling profits and the threat of bankruptcy or nationalisation.

China is the world’s biggest producer of solar panels, most of which are exported, and the US levied hefty antidumping tariffs and countervailing duties on Chinese-made solar cells this year. The EU followed suit by launching a trade investigation of Chinese solar panels in September, the bloc’s biggest antidumping investigation. Beijing responded in July by starting a trade probe of its own into polysilicon from the US and South Korea, two of the world’s biggest producers.